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 Tax Tips


President Obama signed into law “The American Recovery and Reinvestment Act of 2009” (also known as “The Stimulus Bill”) on February 17, 2009.


Here are some of the highlights of this Bill:




  • The alternative minimum tax (“AMT”) patch for 2009 raises exemption amounts slightly above the 2008 patch level.  The 2009 AMT exemption amounts are: $70,950 for joint filers and surviving spouses and $46,700 for singles and heads of households.


  • The new law raises the first-time homebuyer tax credit to $8,000 and extends it at that level through November 30, 2009.  It also eliminates any required repayment to the IRS after 36 months in the home


  • It allows purchasers of new automobiles for the rest of 2009 an above-the-line deduction for state and local sales taxes or excise taxes paid on the purchase.  The new law puts two limits on this deduction: 1) deductible sales or excise taxes cannot exceed the portion of the tax attributable to the first $49,500 of the purchase price  of any one vehicle; and 2) any deduction will be phased out to the extent the purchaser has adjusted gross income exceeding $125,000 ($250,000 for joint returns).  Any newly purchased vehicle, including cars, SUVs, light trucks or motorcycles, first used by the taxpayers that weighs no more than 8,500 gross pounds generally qualifies.


  • Current unemployment benefits are included in a recipient’s gross income 100% for federal income tax purposes.  The new law temporarily excludes up to $2,400 of unemployment compensation from a recipient’s gross income for 2009.  Amounts in excess of $2,400 remain fully taxable.




·        The new law extends the 50-percent first-year bonus depreciation allowed under the 2008 Economic Stimulus Act through December 31, 2009.  The extension is retroactive to January 1, 2009.


·        The new law provides a five-year carryback of 2008 Net Operating Loss for qualified small businesses with average gross receipts of $15 million or less.


·        Under current law, investors may exclude 50% of the gain from the sale of certain small business stock acquired and held for more than five years.  The new law increases the exclusion to 75% for stock acquired after the date of enactment and before January 1, 2011.  A small business cannot have assets over $50 million and must conduct an active trade or business.


·        The new law allows an individual who is involuntarily separated from employment between September 1, 2008, and January 1, 2010, to elect to pay 35% of his/her COBRA coverage and have it treated as paying the full amount.  The former employer will be required to pay the remaining 65% but, in effect, will be reimbursed by crediting those amounts against income tax withholding and payroll taxes it is otherwise required to remit to the federal government.  Income and other limitations on COBRA coverage apply.




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